During the past week, interest rates on long-term mortgage loans fell, tying the record low for this year, Freddie Mac reported yesterday. The average rate on a 30-year fixed rate mortgage (FRM) dropped to 4.93 percent, excluding points down from 5.0 percent just last week. The last time the rate was at 4.93 percent was during the week of February 18, 2010, the year’s lowest point. And while today’s rate is low, it was even lower a year ago at this time, with 4.86 percent.
“Interest rates on fixed-rate mortgage declined for the 5th straight week,” said Frank Nothaft, Freddie Mac vice president and chief economist. “The National Association of Realtors reported that median house prices are recovering in more local areas in the latest quarter. On a year-over-year basis for the 152 areas the association reports on, 91 metropolitan areas had positive growth in the first quarter of this year. This compares to 67 areas showing positive annual growth in the fourth quarter of 2009 and only 30 cities in the third quarter of last year.”
But the reason that interest rates fell in the latest week has nothing to do with all those nice statistics. Rates declined because Treasury yields fell, as concerns about sovereign debt around the globe (namely Greece) caused investors to turn to bonds as a safer purchase. The financial turmoil of last week resulted in major stock market swings, contributing to investor fear.
The good news is that if you are looking for a mortgage, you won’t find better rates that right now. Rates on other loans are down as well. Fifteen-year FRM rates slumped to 4.30 percent from 4.36 percent and one-year adjustable-rate mortgages average 4.02 percent, down from 4.07 percent. Even though the federal buyer tax credits have run out, low rates are still making it appealing to buy or even refinance.